DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the hot movers in the under-$10 complex from Thursday, including Prospect Global Resources (PGRX), which is skyrocketing higher by 30%; Cardica (CRDC), which is soaring higher by 27%; Clean Diesel Technologies (CDTI), which is ripping higher by around 20%; and Zion Oil & Gas (ZN), which is spiking higher by 16%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
One low-priced stock that recently spiked huge after I featured it was biopharmaceutical player Zalicus (ZLCS), which I highlighted in Jan. 3's "5 Stocks Poised for Breakouts" at $1.27 per share. I mentioned in that piece that shares of Zalicus of were starting to spike higher and take out some near-term overhead resistance at $1.22 a share. That move was quickly pushing the stock within range of triggering a major breakout trade above some key overhead resistance levels at $1.43 to $1.45 a share.
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Guess what happened? Shares of Zalicus didn't wait long to trigger that breakout, since the stock exploded higher on Jan. 8 with monster upside volume. This stock went on to tag an intraday high of $2 a share on that day, which represents a monster gain of over 50% for anyone who bought the stock around the levels from my original article. As you can see here, when trading lower-priced stocks the gains can be incredible when we key overhead resistance levels are taken out with volume.
Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.
I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.
When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.
With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.